Third Try a Charm for Small Pennsylvania Airport

Jerry Lynott On May 15, 2006
Source: The Times Leader

Again the director of the Wilkes-Barre/Scranton, Pa., International Airport is asking the federal government for hundreds of thousands of dollars to subsidize low-cost airlines considering service locally.

As in the past, the airport and its owners, Lackawanna and Luzerne counties, also plan to contribute tens of thousands of dollars to the incentive package.

If the airport is successful with its latest request, more than $2.35 million in publicly funded subsidies would be provided to new airlines since 2004.

Financial problems grounded Vacation Express in 2004 and Hooters Air this year, the two previous low-cost airlines that received subsidies. The $475,000 requested this time around by airport director Barry Centini from the U.S. Department of Transportation is designed to fill the void left by Hooters and would drive down fares of the existing airlines.

Last month Centini, with the backing of the counties, applied for a grant through the department's Small Community Air Service Development Program. It's the second time in two years they've requested the federal funding that can be put to a variety of uses such as advertising, handling the aircraft on the ground and guaranteeing the airline covers the cost of flights.

Almost half of the $625,000 received in the 2004 grant funded the short-lived Hooters Air service. The remainder went to Northwest Airlines for its service to Detroit.

Centini did not return a message left with his office.

In the application he said the airport has had prior success with low-cost carriers based on the response by travelers and by existing airlines lowering fares in some markets. But he acknowledged, "Successfully retaining those carriers long-term has proven difficult."

The current grant request filed April 7 with the department says the money would be spent on either Allegiant Air or USA 3000 for direct flights to Orlando, Fla., and the start-up CQ Air for flights to its proposed hub at Harrisburg International Airport and other regional markets.

The application also says the counties will each contribute $62,500 and the airport will kick in $50,000 to complement the federal share. The combined $650,000 in airport, county and federal funds will go toward ground handling services for six months to be provided by Aviation Technologies Inc., based at Wilkes-Barre/Scranton, and to marketing new and existing service. In addition, the airport will waive landing fees for six months.

The airport expects that the money will spur competition and give a potential new low-cost carrier reason to stick around.

"From the successful implementation of these programs goals (Wilkes-Barre/Scranton) anticipates a residual affect (sic) of reduced fares in some markets and a significantly increased level of service to at least 2 prime markets," Centini wrote.

Wilkes-Barre/Scranton is an ideal candidate for funding through the program, which targets airports with insufficient air carrier service or unreasonably high fares, according to the latest application. The document did not mention the airport's major expansion projects. The new $41.5 million terminal building will open on May 25.

Repeating nearly word-for-word the 2004 application, Centini wrote, "Air travelers using the Wilkes-Barre/Scranton International Airport pay among the highest fares of any similar sized airport in the country."

Compared to similarly sized markets with between 350,000 and 500,000 origin and destination passengers, Wilkes-Barre/Scranton ranks 10th out of 22, with an average one-way fare of $163. Montgomery, Ala. was the highest with a $187 average fare and St. Petersburg, Fla., the lowest with $95, according to U.S. Department of Transportation data contained in the application.

In 2005, the combined total of people boarding and disembarking planes at Wilkes-Barre/Scranton was 439,189, according to the airport.

With the loss of Hooters Air, the passenger figures for this year will be lower, Centini wrote in the application.

During its five months of operation, Hooters carried 7,757 passengers to the Florida destinations of Orlando, Ft. Lauderdale and St. Petersburg/Clearwater and Myrtle Beach, S.C. The charter airline associated with the Hooters restaurant chain cut short its 11-month contract in March, citing internal financial problems.

The airport spent $246,875 of a $625,000 grant from 2004 on Hooters Air. The other $378,125 went to Northwest Airlines. Luzerne and Lackawanna counties each contributed $125,000 and the airport added $25,000 for a total of $900,000 in combined funds. Northwest continues to fly the route with two daily departures.

A portion of that grant was intended to keep Vacation Express flying beyond its six-month contract. The airline was having financial troubles and had notified the airport it was stopping service to Orlando by the time the grant was approved in August 2004. It carried 10,626 passengers over the length of the contract.

The counties provided the bulk of funding for Vacation Express, but cut off the money at the end of its contract in September 2004. The airline received more than $800,000 in airport and county subsidies.

While airports are competing for airlines, they are also competing among themselves for a share of the $10 million in federal funds available this year through the program. Up to 40 grants could be awarded this summer as the department reviews the scores of applications submitted from airports nationwide. Federal law mandates that no more than four airports from a state can receive grants.

Last year the Bradford Regional Airport received $220,000 and the Williamsport Regional Airport, $500,000 in grants. The year before that the Arnold Palmer Regional Airport secured a $600,000 grant and the DuBois-Jefferson County Airport received $400,000.

Besides Wilkes-Barre/Scranton, five other airports in the state have applied this year.

The closest applicant, the Lehigh Valley International Airport near Allentown, is asking for $1 million. It is served by Allegiant Air, one of the low-cost airlines Wilkes-Barre/Scranton is courting.

Allegiant of Las Vegas, Nev. and CQ, a startup based in Easton, wrote letters of interest that were attached to Wilkes-Barre/Scranton's application.

USA 3000, based in Newtown Square and affiliated with Apple Vacations, did not supply a letter.

Subsidies do not guarantee a carrier will commit to providing service, said Scott Tyra, director of planning for Allegiant.

He acknowledged talking to Wilkes-Barre/Scranton. The letter he submitted to accompany the airport's application said the airline is "carefully assessing the market. One of the issues we will consider is the market's ability to broadly support Allegiant, and we view the use of funds such as those available from this grant to be important indicators of a community's commitment."

The airline has gone to airports that have and have not offered incentives, he said.

In the case of CQ Air, the funding "will almost guarantee" service originating from the airline's proposed hub at Harrisburg International Airport, wrote Mike Adams, senior project manager for the airline.

Adams was out of the office traveling and unavailable for comment.

"This Grant would provide CQ Airlines the incentives designed to stimulate our desire to initiate service to new (origin and destination) markets from (Wilkes-Barre/Scranton International Airport) that might otherwise not be serviced should the incentives not be available," he wrote.